Growth will result from an improving economic climate and an acceleration in manufacturing, supported by relatively low natural gas prices and strength in key lubricant consuming industries.

US demand to rebound modestly through 2018

US demand for lubricants is forecast to
expand less than one percent annually
to 2.5 billion gallons in 2018, valued at
$27.5 billion. Although demand growth
will be modest, this will represent a
reversal of an outright drop in demand
between 2008 and 2013. Growth will
result from an improving economic
climate and an acceleration in manufacturing activity, supported by relatively low
natural gas prices and strength in key
lubricant consuming industries. However,
stronger gains will be held back by
losses in the light vehicle market, where
the long term trend of falling lubricant
demand will continue. Improved efficiency and less frequent oil replacement will
be a common trend not just in light
vehicles but throughout lubricant markets, serving to prevent faster growth.
Longer oil change intervals will result
from the greater use of higher quality,
better performing products, such as
synthetics. However, growth will remain
healthy in value terms as average prices
benefit from this shift toward premium
products.

Light vehicle lubricants to remain largest segment

Light vehicle lubricants will continue to
hold a unique position in the market as
both the largest segment and the one
most visible to consumers. Improvements in vehicle technology and lubricant formulations will continue to be
rapid, driven by an industrywide focus on
improving fuel efficiency in cars and
trucks. As the US light vehicle fleet
gradually shifts toward cars calling for
very high quality, low viscosity oils, these
types of products will continue to gain
favor. Manufacturer and industry specifications such as the upcoming ILSAC
GF-6 and General Motors’ current
DEXOS standards will be influential in
promoting these trends, as will marketing
efforts on the behalf of lubricant companies seeking to promote their premium
lubricant products. Over the longer term,
rising use of electric vehicles has the
potential to substantially impact demand,
as these vehicles do not require engine
lubricants.

Better growth opportunities exist in other markets

Better growth opportunities will exist in a
number of other important markets. The
US construction industry, which makes
use of engine oils and other lubricants in
construction equipment, is expected to
continue a strong recovery from the
2007-2009 recession and be among the
fastest growing lubricant markets. The oil
and gas industry will continue to provide
rising demand for lubricants in oilfield
and pipeline applications. Furthermore,
energy intensive industries such as the
production of metals, motor vehicles,
machinery and electricity generation will
all benefit from natural gas prices
remaining low by historical standards.